Running a business can be hard. Especially in our modern, dynamic, and fluid world. Circumstances change quickly, new technologies emerge, new ideas and hundreds and thousands of entrepreneurs create high competition. If you do not adapt, your business is at risk.
5 years ago, the world was spinning slower and business processes designed a decade before still seemed to be productive. This does not occur anymore. What worked 2 years ago, does not work that well today. Old systems and procedures become inefficient and kill businesses much quicker these days.
Take a look at the most common impacts that inefficiencies cause in business. Prepare yourself to keep an eye on them and be ready to act in case you find one inside your organisation.
What is the primary goal of every business? Right, to earn money. Call the ATO and ask them. Don’t get confused with the mission which, I believe, will be different from the goal.
Technically, financial issues are the result of all inefficiencies in the business. The direct impact, however, is from unnecessary expenses which may cost up to 20-30% of revenue every year. What would you do with this extra cash?
Money leaks are the easiest to notice if there are appropriate measurement and reporting in place. Yet, many business owners rely on accounting reports which reflect the outcome for a certain period and are good for a tax agent only.
The most popular – and the most dangerous – way to resolve it is to pour additional cash into the business regularly. However, this only treats the symptoms – not the disease itself. It disconnects profits from revenue and someday cashflow may run dry.
The second most common and important impact is on time. If you can use additional cash for the previous one, it is not possible to add even a second on top of 24 hours a day.
Fair or not, this limit applies to everyone, and many businesses have mastered it. Looking from outside it seems they have hacked the system, but they don’t. They’ve just got all the processes right. Time is the most precious resource we have in our business and life. We cannot earn time as we do with money.
We can only spend it wisely. Someone can say if you run out time in your business, just hire more people! This is not always the best solution and, in many cases, just transforms problem number two into problem number one. More employees cost more money and not necessarily proportional to outcomes.
Repeating, mechanical, or error-prone routines frustrate people. If you perform them for more than 35% of your time every single day, you probably will not be willing to smile at the end of the day.
Ineffective processes, unnecessary routines, bureaucracy, uncertainty and poor management harm trust and morale in the organisation. Damaged morale affects productivity and quality.
Declining productivity triggers the ‘time’ problem and shrinks the outcomes for the same cost.
Lowering quality has a much larger effect and may kill business rapidly. If your customers begin receiving inferior products or services but are still paying the same price, they will walk away.
Practice the philosophy of continuous improvement. Get a little bit better every single day. – Brian Tracy
Keep continuously improving your business from inside and it will pay you back.